Thanks to the recent acquisition of Vancouver’s Layer 7 Technologies by CA Technologies, Vancouver’s tech sector has a few more millionaires.

And the transaction, said to be one of the largest deals for a software company in Vancouver in the past decade, has delivered lucrative returns to venture capitalists here who backed the company in the almost 11 years it has taken to grow from a fledgling startup to one of the top three contenders in its field.

“For a software company, it is one of the largest deals in a decade,” said Dimitri Sirota, one of the four co-founders of Layer 7, who launched their company in borrowed office space in Yaletown 11 years ago this month. “In terms of leaving a legacy of a large expanding office here, in terms of generating wealth, in terms of generating a return on investment – by any measure it is a very successful transaction.”

The New York-headquartered CA Technologies, which has 14,000 employees and reported $14.8 billion in revenue for fiscal 2012, announced the acquisition at its recent CA World conference.

Since it was launched by Sirota and co-founders Jamie Glennon, Lonny McLean and Toufic Boubez, Sirota said Layer 7 raised a total of $21 million in venture capital, with investment coming from the Bay area, from Vancouver’s GrowthWorks, the Business Development Bank of Canada and local angel investors.

“One of the things we feel proud about, each of our local investors will get around $50 million each on this transaction while they’ll reinvest in the local community,” said Sirota.

“A large pool of BC angel investors will do very well and a lot of employees will be millionaires.

“It has created wealth in BC that will be reinvested here.”

Layer 7, which has grown to 180 employees, some of whom Sirota said will become millionaires from this deal, is considered a leader in API management, the software space where it made its name. API stands for application programming interface and it’s the interface that lets software components communicate with each other.

Layer 7 was ahead of its time when it focused on this field 10 years ago but the tech world caught up and in the past five years, demand among large companies for its API security and management products has exploded.

“There is a need for big companies to share data across their organizational boundaries,” said Sirota. “When we got started, some people needed this and obviously we were able to generate some revenue but not a lot of people needed it.”

That changed in the past five years as companies have made the shift to cloud computing, mobile technology and web-based apps, a shift that left enterprise customers looking for solutions that could help them both manage and secure their data across a growing number of devices and platforms.

Layer 7 counts among its customers corporate heavyweights like Cisco, Adobe and General Motors and major government clients. including the US Department of Defense, the Department of Homeland Security and other American government agencies.

“Five years ago we were at 30-some employees bouncing along at a couple of million (a year in revenue),” said Sirota. “Now we have 180 people . . . we market primarily to the US and we have close to 300 customers, they are household names like Cisco, Adobe, Xerox, GM and Audi.

“Equally important we have been able to win over probably the most demanding US government customers…Even though we are based here we have always been very deliberate about focusing on the US market.”

Last year Layer 7, which a received a number of industry honours including most recently being named a finalist as company of the year for the BC Technology Industry Association’s Impact Awards, made close to $30 million in revenue last year, according to Sirota and the company expects that to climb to $55 million by the end of this year.

While no dollar figure was released for the transaction, industry watchers say the Layer 7 deal is in the same range as another recent major acquisition of an API management company Mashery, which was acquired by Intel for a reported $180 million.

Sirota said Layer 7 will remain in Vancouver.

“Right now the plan is to grow here,” he said.

Sirota is the only founder still with Layer 7. Toufic Boubez left to start another company Metafor Software although he still retained a small stake in the company.

“It’s a very big deal for Vancouver, both because of the numbers and the impact on the Vancouver scene,” he said of the sale to CA Technologies.

Boubez said the four co-founders probably had a less than 10 per cent combined stake in the company when it was sold.

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the “X” in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.